Legislative Assembly of Ontario

AGENCY REVIEW

LIQUOR LICENCE BOARD OF ONTARIO

CONTENTS

Wednesday 23 January 1991

Agency review

Liquor Licence Board of Ontario

Adjournment

STANDING COMMITTEE ON GOVERNMENT AGENCIES

Chair: Runciman, Robert W. (Leeds-Grenville PC)

Vice-Chair: McLean, Allan K. (Simcoe East PC)

Bradley, James J. (St. Catharines L)

Frankford, Robert (Scarborough East NDP)

Grandmaître, Bernard (Ottawa East L)

Haslam, Karen (Perth NDP)

Hayes, Pat (Essex-Kent NDP)

McGuinty, Dalton (Ottawa South L)

Silipo, Tony (Dovercourt NDP)

Stockwell, Chris (Etobicoke West PC)

Waters, Daniel (Muskoka-Georgian Bay NDP)

Wiseman, Jim (Durham West NDP)

Substitutions:

Murdoch, Bill (Grey PC) for Mr Stockwell

Perruzza, Anthony (Downsview NDP) for Mr Wiseman

Clerk: Arnott, Douglas

Staff: McNaught, Andrew, Research Officer, Legislative Research Service

The committee met at 1407 in committee room 1.

AGENCY REVIEW

Resuming consideration of the operations of certain agencies, boards and commissions.

LIQUOR LICENCE BOARD OF ONTARIO

The Chair: I wonder if we could come to order, please. There are two witnesses appearing before us this afternoon from the Liquor Licence Board of Ontario: Ms Karakatsanis, who is the chair of the board, and Barry Tocher, who is the executive director. Ms Karakatsanis has an opening statement. The floor is yours.

Ms Karakatsanis: By way of opening remarks, I would like to touch briefly on the history of the board, its composition and mandate, and perhaps outline some major recent legislative changes.

In 1927 the Liquor Control Act repealed prohibition and created the Liquor Control Board. In 1946, authority for beverage alcohol regulation was divided between two boards. As you know, the LCBO, the Liquor Control Board, is the commercial arm and it is responsible for the sale of liquor in government stores. The LLBO, the Liquor Licence Board of Ontario, is responsible for licensing and the regulation of the beverage alcohol industry.

The modern liquor legislation dates back to 1976. It was at that time that a licence became a right rather than a privilege. That right is qualified in the act, but that represented a major change and all those who are affected by decisions of the board, all parties, are entitled to a hearing before the board. So those are the origins of the modern legislation, which was amended again this past September.

The Liquor Licence Board is a corporation to which the Corporations Act does not apply. There are two fulltime members, the chair and the vice-chair. There are seven part-time board members. Two positions are new and they have yet to be filled. The chair is the chief executive officer and I report to the Minister of Consumer and Commercial Relations. The executive director is the chief administrative officer. He is responsible for the day-to-day operations of the board.

The board members are representative in respect of gender, ethnic background, geographical location, language and profession. They are charged under the act with the responsibility of enforcing and administering the Liquor Licence Act. They have two basic functions. They oversee the general administration and policy directions of the board and they meet once a month for that purpose. As well, they act in a quasi-judicial capacity in the granting, transferring, suspending or revoking of liquor licences. Members on average serve about four to five days a month, that is, the part-time members. So it is a fairly active board.

The powers and duties of the board, as I have briefly outlined, are to license manufacturers of liquor to sell their product to the LCBO, to issue licences for the sale and service of liquor and for the delivery of liquor for a fee, to license agents and representatives of manufacturers, to attach terms and conditions or to suspend or revoke licences. We issue Ontario photo cards, which were once known as the age-of-majority cards, and we pre-approve all liquor advertising, in the province. These objectives are achieved by inspections and investigations of licensed establishments and the disciplinary proceedings of the board.

Just to give an indication of the scope of the board's activities, there are 14,000 licensed establishments in the province. We process in excess of 120,000 special occasion permits annually. There are approximately 1,500 applications for new licensed areas in the province annually, as well as 1,700 applications for the transfer of existing licences. We pre-clear approximately 12,000 advertising submissions annually.

The mandate of the board really goes back to its history, in the sense that in 1986 the board was entirely replaced and reconstituted. Senior management was changed at the same time. There was a complete break in the administration in February 1986.

The specific mandate of the board at the time was to address the public perception of the board as a somewhat politicized and arbitrary organization. New hiring practices and administrative practices were brought in, keeping in line with the Ontario civil service, and in 1986 the act was amended to allow the board to appoint its own employees rather than having all employees appointed by order in council, which was the previous procedure. The board adopted as its statement of purpose that it would regulate the service and consumption of beverage alcohol in the province of Ontario in a manner consistent with the promotion of moderation and responsibility.

In June 1986, the government established the Advisory Committee on Liquor Regulation to review liquor legislation, obtain public and industry input and bring liquor legislation into the 1980s. The committee conducted 21 public meetings throughout the province in the fall of 1986. I should say I was appointed as a part-time member back in February 1986 and was a member of this advisory committee as well, and Mr Tocher was the new executive director who was brought in as well in February 1986.

We went to 21 different places throughout the province and we heard briefs from more than 700 people and organizations. Members of the public attended the meetings and expressed to us their views on how liquor legislation should proceed in this province. The advisory committee released its recommendations in February 1987. Those recommendations were considered by two successive ministers and it was in June 1989 that certain decisions were made and an announcement made based on the recommendations of the advisory committee.

Really the amount of public consultation and input was, I think, unprecedented, not only with the general public but as well with various client groups, including industry associations, law enforcement agencies, municipalities and public interest groups such as the Addiction Research Foundation, with all of which we have developed a good working relationship.

As well as having new legislation which was effective September 1990, a new act was proclaimed. As well, the licensing regulations were amended and there were significant changes in that area. That coincided with new technology at the board. Important functions of the board were computerized in September 1990. We were essentially paper-driven before that time. There are new computerized management information systems and new policy and procedure manuals developed to ensure that there is speedy and consistent service to the public in Ontario.

I thought I would take a few minutes to outline what the application procedure is for a licence. All applications for a licence or for the transfer of a licence are considered by a board member. All applications for new licensed areas are advertised. They are advertised in local newspapers and placards are posted on the premises. The changes to the regulations strengthened those requirements and made the placards mandatory. As well, we have redesigned them and made them significantly larger.

The public is advised that it has 30 days to provide written objection to the board and if an objection is received from even a single resident in the municipality, the board must refer the application to either a public meeting or a public hearing. Most cases go to a public hearing. A public meeting is more informal and it is reserved for those cases where the objections appear, on the face of it, to be irrelevant or frivolous or something outside the jurisdiction of the board.

Most cases are referred to a hearing, which is a quasi-judicial hearing before two other board members where evidence is led and board members make a determination as to whether or not the licence should be issued.

If no objection is received or, in the case of all transfer applications, the application is reviewed by the board member, it can be approved upon written documentation, a board member can interview an applicant if there are any concerns or the application can be referred to a full hearing before two other board members for determination.

I mentioned earlier that there was a right to a liquor licence subject to certain conditions which are spelled out in section 6 of the act. Within that context, the board members consider such things as an applicant's criminal record, adverse financial information, the applicant's previous experience in the industry, whether the premises comply with the regulations and municipal zoning bylaws and fire and health legislation and the proximity and impact of the premises to the residential areas.

Because of the new regulations and new technology it is a bit early to make a prediction, but it does appear that since the middle of September the application process, where there have been no problems, has been reduced by about half. It used to take four to six months to process a routine application; it now takes two to three. Of course, if a hearing is required, that will add to the application time, the process time.

There are basically two kinds of hearings. I have indicated the public interest hearing. As well, there are disciplinary proceedings.

Hearings are conducted by two board members. Evidence is presented by board counsel. In the case of public interest hearings, board counsel is available to assist the residents in presenting their case.

Applicants and licensees are often represented by counsel. Hearings are conducted in accordance with the rules of natural justice and the Statutory Powers Procedure Act and the members administer the oath and add any interested persons as parties. The members must decide if the allegations are proven based upon the evidence presented and the submissions presented during the hearing itself.

The onus is on those who are opposing the licence to show that it would not be in the public interest, to show whether the issuance or continuation of a licence would not be in the public interest, having regard to the needs and wishes of the residents of the municipality in which the premises are located.

The board considers the impact upon the residences of those consequences flowing from the sale and service of liquor, for example, late-night noise and rowdyism.

Zoning matters, parking matters, things that are strictly of a land use nature are not matters that are within the board's jurisdiction and are issues for the municipality.

Board members provide full written reasons and any party to a proceeding may appeal the decision of the board to Divisional Court on a question of law. The recent changes to the legislation abolished the appeal to the Commercial Registration Appeal Tribunal, which had provided for a hearing de novo and had resulted in multiplicity of proceedings. The board does, however, now have the ability to vary or rescind its own decision with the consent of the parties. Where the parties demonstrate that there was an error made there is an informal proceeding to vary or rescind the order.

I will try to be quick in outlining some of the major changes that occurred effective September and I will try to focus on the licensing legislation.

Basically, the regulations have been streamlined. Specific needs for revision have been addressed within the framework both of industry requirements and continuing social responsibility. We have gone from 13 different classes of licences to one class of licence. All licence holders must ensure that light meals are available to their patrons at all times. The food-liquor ratio was abolished and it was replaced with requirements relating to food availability, food storage, serving and preparation.

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A number of endorsements are now available to a liquor sales licence. Many bar and room service endorsements are available to any establishment adjacent to a facility renting overnight accommodation. This accommodates hotels and motels which did not have a licensed restaurant within the hotels.

The caterer's endorsement is new. It permits a licence holder who has a caterer's endorsement to serve liquor outside of his licensed premises and cater somebody else's event. This replaces the requirement for a special occasion permit. There is a notices requirement. They have to notify the board, the police and the municipal authorities where they are going to be serving and when, and it is a requirement of all staff serving under the caterer's endorsement receive training, the server intervention program offered by the Addiction Research Foundation. That is a pre-condition to service under the caterer's endorsement. This provides a more convenient method of serving liquor at events and also provides greater choice to the public and provides greater control over these events, because the licence holder has expertise in the service of liquor and also has much more to lose and is therefore more likely to comply with the liquor legislation.

Many detailed premises rules were abolished. We no longer have to count the number of squash courts or the number of showers in a recreational facility. Banquet halls are now eligible for a licence. Licensed establishments may cater to private parties. A number of the detailed premise rules were eliminated.

With respect to underage persons, there have been a number of provisions that have tightened up the controls in that area. The lounge licence was abolished; that was that about 15% of the licences before did not allow the presence of minors, or I should say, someone under the age of 19 in the premises at all. Instead, that will be accommodated on a case-by-case basis. The board may impose a condition upon a licence that minors not be permitted on the premises, but I expect that the majority of licence holders who have concerns in this area will be doing so by way of voluntary house policy. A licence holder could have a house policy that prohibits the presence of minors during specific hours or in the evenings, and once that is filed with the board that must be consistently enforced.

The Human Rights Code was also amended to permit the enforcement of 19 years of age as the drinking age, and there is a new offence: licence holders cannot permit the possession or consumption of liquor in a licensed establishment -- that prevents someone who is 19 from ordering a drink and passing it on to his or her 15-year-old buddy.

A licence holder cannot permit illegal drugs to be held or distributed, sold or consumed in the licensed premises. That is a new provision, one that has become increasingly necessary, particularly in some of the urban centres.

The regulations dealing with prohibiting price discounts have been strengthened and those are the regulations that prohibit happy hours and happy days.

The definition of "manufacturer" was amended to include foreign manufacturers, so that they be subject to the same restrictions as domestic manufacturers with respect to advertising and promotion. As well, there are a number of provisions that allow us to deal more effectively with special occasion permits. We have the authority to disqualify a premise, to refuse to issue permits for a particular location after a hearing based upon evidence of past violations at the premises. As well, we can cancel a permit in advance of the event if there is evidence that the law has been breached or false information provided.

Some of the pending changes that can be accommodated because of changes to the act relate to delivery licences and we are in the process of finalizing regulations in that respect. Delivery licences will authorize an individual to deliver liquor for a fee. That is currently permitted just by written authorization from the LCBO, and basically there are no mechanisms by which you can revoke an authorization currently by bringing it under the authority of the liquor licence board. It will be subject to all the controls and subject to all the procedures for suspension and revocation of licences that exist for other kinds of licences.

We are also currently reviewing the advertising guidelines. I mentioned briefly that advertising guidelines were updated by the board in April 1990 to reflect the advertising principles which were announced by the government 1 June 1989. There is consultation in progress at this time. The advertising principles are currently being reviewed by the minister and the board is involved in that process.

The other major area that requires further regulation is the mandatory server training. Mandatory server training for servers of liquor addresses such issues as the legal liability of servers, factors which affect blood alcohol level, how to recognize signs of impairment and how to deal with a patron who has had too much to drink. Mandatory server training is currently required under the regulations for servers in stadiums, under the caterer's endorsement and where ordered by the board following a disciplinary proceeding or upon approval of an application. The board is currently working with the Addiction Research Foundation and the industry associations to determine a proposal for the implementation of mandatory server training. That proposal should be brought forward to the minister later this spring.

As you can see, we have been very busy in the last few years. In the last few particularly there have been significant changes at the board. There are a number of areas, as I indicated, where further regulations are required.

Another area we have identified as one we wish to address this year is in the area of our communications. We have established a very good working relation with many of the client groups of the board and we have also published a licensee newsletter which is distributed to 15,000 different addresses. That comes out four or five times a year, basically as required.

We would like to work on pamphlets for the general public, to involve the general public more in the processes of the board. We are asking for funding to be able to publish those pamphlets in a multilingual form. That is one area we would like to address, to make the board more accessible to the general public. On that topic, we have also scheduled some hearings in April and May, public interest hearings for specific applications. We have scheduled a few in the evening to see how that works out. Hopefully, that will make it more accessible for people who wish to participate in the process.

The recent amendments did streamline the process and in and of themselves make it easier for people to participate. There used to be a mandatory public meeting, which then resulted in the hearings, which then resulted in a hearing before the Commercial Registration Appeal Tribunal. The public had to attend three different hearings in order to pursue their objection to a licence. They often made the complaint that the system was designed to wear them down, and it was pretty hard to disagree with that. Right now, with the changes to the legislation, a single written objection that says, "I object" will trigger a hearing, and that is the full hearing at which the issue will be determined and resolved. Hopefully, that will make it much easier to deal with this in a more fair, expeditious manner that is open to more people to participate in.

I have covered a lot of territory very quickly. We would be happy to answer your questions.

The Chair: Perhaps before we get into questions, you may want to make some brief reference to the comments the Provincial Auditor made in his last report, especially the one that perhaps received the most public attention, the question of inspections.

Ms Karakatsanis: The board's response is outlined in the Provincial Auditor's report. Basically, the amendments I have outlined to you in the legislation and the new technology of the board have made a real difference. It allows us to deploy our resources far more efficiently. Because there were 13 different kinds of licences, because the licensing issues were so complex, that required a lot of attention by the inspector. A significant part of an inspector's duties related to the licensing and pre-inspections of premises that had applied for a licence.

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With new technology we are able to narrow the group of licensees or licence holders that are problem locations. We are able to rate them as high-risk and low-risk, and we are able to deploy our inspectors more efficiently. We have changed our inspection areas so that there is more equity in the workload of inspections. There have been a number of things that arise out of the changes to our technology and legislation in September which allow us to be far more efficient and more selective in the deployment of our resources.

With respect to the specific findings made by the Provincial Auditor, I have to say that they are really not very helpful in looking at the issue of whether or not the inspectors are properly fulfilling their compliance function. Saying that inspectors spend 20% of their time on inspections and on spot calls ignores the fact that they also do complaints investigations, liaison meetings with police, meet with local residents, attend board hearings and testify before the disciplinary proceedings. All of those other functions, which are just as important for the compliance aspect of their roles were not something the Provincial Auditor included when he looked at the 20%. The Provincial Auditor was looking at something that was identified as an inspection and as a spot call, and did not include those other functions that were identified as complaint investigations, liaison meetings and other compliance functions.

Just to summarize, with the simplification in the licensing process there will be less demands on inspectors' time with respect to their role in the licensing of new establishments. And with the new regulations and the new resources and new technology, we are able to better deploy the inspectors and focus their attention on the problem establishment. You have some data, Barry, on the number of spot calls and so on.

Mr Tocher: That is correct. In the current fiscal year we have already been able, because of the changes in the act and the regulations and because of technology, to increase the number of spot calls by 35% relative to the same period last year. This year, we are forecasting that we will complete at least 18,000 spot calls; that compares to roughly 14,000 in the previous fiscal year.

In the next fiscal year, we are expecting an even larger improvement in the number of spot calls, because we will have a full year then under the new legislation and our new technology will have been fully implemented. We anticipate a rather substantial increase in the number of spot calls that will be carried out by our field staff.

Ms Karakatsanis: Another point I neglected to mention is that we do rely very heavily on local law enforcement agencies to monitor and identify problem establishments for us. The majority of our disciplinary hearings rely on testimony from local police officers with respect to infractions they have observed. In many areas, our local police forces have units that are detailed to watch licensed establishments and do routine patrols. The inspectors are really not the only people out there. We do rely on the law enforcement agencies, and there is significant liaison between the inspectors and the various police forces.

Mr McLean: I want to ask a couple of questions with regard to the manufacturers' licences. I do not know whether you have that before you, but it was an order in council in 1990. It has to do with the percentage that is increased year by year. I would like you to explain to us how that percentage would be arrived at. It goes up until 1994, 23.2% for the period beginning 15 June 1994. I was curious, when I looked at it, about how these percentages came about.

Mr Tocher: I believe what you are referring to are the ad valorem fees that apply to small manufacturers -- beer manufacturers primarily, the micro-breweries, as we call them.

A couple of years ago, the micro-breweries were concerned that the ad valorem rates established in the regulations were rates that were really set when we had in this province three large breweries: Molson, Labatt and Carling O'Keefe. They argued successfully before the government that those rates were too high, they were unfair. It made it very difficult for a small micro-brewery to get established in this province. They were successful in convincing the government that those rates should be reduced.

So then, under our legislation, the Treasurer through a budget presentation amended the ad valorem rates for micro-breweries. A micro-brewery was defined as a brewery that produced less than 50,000 hectolitres of beer a year. They decided on a sliding scale. The idea was to start with an ad valorem rate that was 50% of what the rate was for large breweries and then bring it back up to the original rate, I think over a period of three to four years. The view was that that would give the micro-breweries ample opportunity to get off the ground, get established, develop a market and get their product out there. They felt a three- to four-year lead time was perhaps sufficient to allow for that. That was the rationale behind the sliding scale.

Mr McLean: Somewhere in the report I read there was about $400,000 in revenues uncollected. Were those the large breweries?

Ms Karakatsanis: The $400 million?

Mr McLean: Was it $400 million? I thought it was $400,000.

Mr Tocher: No, no. It is $400,000.

The Chair: That is, serving the products of these business establishments. It is in the Provincial Auditor's report.

Mr McLean: Were you not aware of that?

Ms Karakatsanis: I just want to know what it is. I am sorry: $400,000.

Mr McLean: I want to know what it was, too; that is why I am asking the question. The board's revenue and expenditures for the 1990 fiscal year totalled approximately $427 million and $10 million respectively. That was revenues and expenditures, but somewhere I read there was $400,000 that should have been collected and was not. It is on the next page, "fuller application of the liquor legislation."

Ms Karakatsanis: There were two items the Provincial Auditor was addressing. The first one was approximately $300,000 in revenue, which related to ad valorem fees that would have been paid upon beer that was manufactured in the plant and that was consumed under the hospitality licence in the plant.

The interpretation had been that the ad valorem fees applied to beer that was shipped for sale or distribution in Ontario, and that had not included the beer that was not actually shipped out of the plant. It was consumed in the plant under the hospitality licence. Based upon the Provincial Auditor's interpretation of that section, the board requested that the brewers pay those fees going back to April 1989. We made that request in July following the auditor's report. Two of the brewers have not yet paid the fees. The Brewers of Ontario has asked that this be reviewed to determine, first, whether the interpretation of the section by the Provincial Auditor was correct and, second, whether it would be appropriate to collect fees back for a year before that.

We have asked the Attorney General for an opinion on the meaning of that section, and we will take it from there.

Mr McLean: What is your opinion on it?

Ms Karakatsanis: I am a lawyer, and --

Mr McLean: That is why I ask.

Ms Karakatsanis: I think it is likely that they do include the ad valorem fees on beer that is consumed in plant. However, I can tell you there are lawyers who disagree with me. That is not an uncommon situation to be in.

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Mr McLean: One final question: In your opening remarks, you mentioned two new positions that were not filled yet. What are they and what is the salary of those positions?

Ms Karakatsanis: They are positions for two part-time board members. The amendments to the act that went through the House in June and were proclaimed effective September of this past year increased the size of the board from seven to nine, so two part-time board member positions are available. The per diem is $125 per day.

Ms Haslam: I have a note here to ask about a brewery licence. I would like to follow that up, as Mr McLean mentioned it. When you go on a tour of a brewery and they entertain you, am I to understand that is done under a separate licence called a hospitality licence?

Ms Karakatsanis: That is the way it used to be done and the subject of that finding by the Provincial Auditor. The hospitality licence was there to permit someone to give away liquor in a private place. One of the amendments to the act was to permit the consumption of liquor in a private place where liquor was not being sold, a location that was not open to the general public. So presumably these areas will now qualify as private places in the manufacturing plant.

Ms Haslam: Is their licence then a hospitality licence? Are they still licensed?

Ms Karakatsanis: The hospitality licence still exists: they have the piece of paper. But it is not there as a class of licence any more and it would not be required. I think they have become defunct. They would no longer apply.

Ms Haslam: That would take me into something l wanted to follow up on, special occasion permits. It is my understanding that if a group came in and got a special occasion permit for a hall and it was subsequently found out that this hall had been through a previous situation where it had had an infraction, then the group's permit would be pulled. Am I correct?

Ms Karakatsanis: No. The board does have authority to disqualify a premise. We could make a finding that because of past problems at a certain premise, no more permits should be issued into that location. That would only be done after a full hearing, however, and there would have to be an order of the board. So at the time there was an application, the applicant would be told that is not a premise for which a permit can be issued.

Ms Haslam: I have one more question on special occasion permits. There is a training course that caterers must have their servers go through. What happens in the case of the special occasion permit, where a club or a union is having a dance? Is there any regulation about who can serve the liquor in those special occasion permits?

Ms Karakatsanis: No, there is not currently a regulation in that respect. Once server training becomes mandatory for service of liquor in licensed establishments, I think it would be useful to look at a way of phasing in, at least having one person who is trained supervise the sale and service of liquor at a permit, but that is not currently a requirement.

Ms Haslam: Is it something you will be looking at? Is it something in your mind to examine within the next while, this particular issue? Is that something you have been looking at reviewing?

Ms Karakatsanis: It is something we will be reviewing when we look at mandatory server training. I think you have to look at the requirements under a permit. It is something that would have to be phased in, perhaps for large events. At this point, I think that is the way it could be introduced, for a large function having at least a requirement that somebody be supervising who was trained.

Ms Haslam: So this could be a recommendation that would come forward?

Ms Karakatsanis: It could be.

Ms Haslam: I have some more, but if you are in agreement, Mr Chair, I will pass and come back to some of my other ones.

The Chair: You will have lots of opportunity.

Mr Grandmaître: I would like to go back to the revenue side of your responsibilities. For instance, every establishment has to pay a fee on beer and on wine and spirits, and so on and so forth. On the beer purchase there is a fee, and also on the wine and spirits. On the beer purchase, if I understand my notes correctly, the beer fees are paid to the Brewers' Warehousing people and the wine and spirit fees are paid to the LCBO. Are those fees the same?

Mr Tocher: I am not sure. Which fees are you referring to?

Mr Grandmaître: In the auditor's report on the revenue side, the auditor was claiming that your fee collection -- "licensed establishments pay fees on the purchase of beer, wine and spirits. Fees on purchase of beer are paid to the Brewers' Warehousing company and on purchases of wine and spirits to the Liquor Control Board of Ontario. Such fees are remitted to the liquor licence board." What I am getting at is, are brewers paying the same fees as the wine and spirits people?

Ms Karakatsanis: I am not sure what they are. When the licensee orders product from the liquor control board under his licence, or from the Brewers' Retail, there is a slight -- I am not familiar with the exact numbers; we can provide you with that -- discount and then there is a fee, a percentage, added so that effectively the licence-holder pays more for his or her product than would you or I if we went in and bought the same product over the counter from the LCBO or from the Brewers' Retail. So they are paying extra. I am not quite sure what the numbers are. I think they differ between the LCBO and the Brewers' Retail. That is something that is administered by the LCBO. It is remitted to us: not under our legislation, but it is administered by the liquor control board and then remitted to us.

Mr Grandmaître: Because further in my notes, from the three largest brewers in the province of Ontario they claim, or my notes claim, that they collect about 80% of all your revenues, $350 million. I was curious what the rest of the small brewers pay. I know it is 20%, but I was interested in the different fees that they pay. There must be a different fee on beer and wine and spirits.

Ms Karakatsanis: The ad valorem fees, which are the fees that are levied on volume produced by brewers, are the $376 million referred to. It is the smaller brewers that have the sliding scale which was referred to earlier. That is different from the fees paid by licence-holders when they purchase the product. The ad valorem fees are paid by brewers based on volume of production. The holders of a manufacturer's licence for wine or spirits do not pay ad valorem fees.

Mr Grandmaître: Okay, good, for the time being,

Mr Frankford: I was going to ask questions on the same lines, because I was not clear, Your revenue is $400 million, in that range. Am I right in thinking that in effect the largest revenue source is essentially a tax on beer?

Ms Karakatsanis: We call it a licence fee on beer, but yes, it is.

Mr Frankford: In essence you are a tax-producing body, I mean, the licensing of premises for consumption attracts more attention. In revenue terms that is a very small proportion.

Ms Karakatsanis: There is no question that the bulk of the revenue comes from the ad valorem fees paid by the brewers, yes.

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Mr Frankford: So that happens to come through you, but it could also be a tax.

Mr Tocher: We are just a collection agency for the Treasurer. Most of our revenue comes from Labatt and Molson, by and large. It is the manufacturing levy under section 16 of the act. There is a sliding scale. It accounts for most of the $450 million.

Mr Frankford: What about revenue from foreign beer, say, or foreign wines? That would be collected by the LCBO. Is that right?

Ms Karakatsanis: We do not collect any licence fees from foreign manufacturers at all. Whatever revenue comes to the government would come through the LCBO on that.

Mr Frankford: So that is taxation in another form.

Ms Karakatsanis: There is an issue there as to whether the province has jurisdiction to tax beer. This is viewed as a licence fee.

Mr Frankford: What about wine?

Ms Karakatsanis: There is no ad valorem fee, there is no volume fee for wine, just beer.

Mr Frankford: Am I correct then that although one thinks of you very much as giving licences for premises and inspecting them, a large part of your impact on government is through your essentially tax-collecting function?

Ms Karakatsanis: Yes, except that also represents a fairly small part of what we do in terms of our operations.

Mr Frankford: Because it is automatic.

Ms Karakatsanis: It is. It is automatic. It is really a collection agency, so it is a fairly small part of our operations and our priority -- I should not say our priority; it is something that is important and that is done, but it does not require a lot of attention; it is automatic.

Mr Frankford: Who sets the fees, then?

Ms Karakatsanis: It is set under our regulations, basically, by Treasury.

Mr Frankford: So the Treasurer, in a budget, can change the fee.

Mr Tocher: He has to do it by regulation.

Mr Frankford: But if a Treasurer wants to raise more money from beer next time, he tells you.

Ms Karakatsanis: It can be done through here, but it would require a regulation change, so it would have to be something passed by cabinet.

Mr Grandmaître: When was the last time the regulation was changed? I was just interested in the use of this as a tax-raising measure. When was it last changed?

Ms Karakatsanis: The last change was in September 1990. The actual rate was not changed at that time. There were some changes again in January to reflect the GST.

Mr Tocher: That is right. There was some adjustment to the ad valorem to take the GST into account and I think it was overall to remain revenue-neutral in terms of taxation on breweries. You will see some changes in the rates, but in actual fact the overall tax that is collected is supposed to be neutral.

In terms of changing and adjusting the ad valorems, I guess the last change was back two or three years ago, when as I mentioned before the small micro-breweries were concerned about the ad valorem and that it was too high, that it did not really reflect the small micro-brewery operation. The government did bring in a different ad valorem structure for small micro-breweries. That is reflected in the regulations. It is a sliding scale and it is to be phased out over a period of several years. So that was the last sort of major change to the ad valorem fee structure for breweries.

Ms Karakatsanis: Actually the September regulations also added two new features. One is that interest can be levied at essentially prime plus two on overdue accounts, and as well there is a penalty provision for payments that are more than 30 days overdue. We have been assessing interest, but it is now in the regulations.

Mr Waters: I have a question on advertising, on the criteria. Do you have to report to anyone, or does government give you direction or anything on the type of advertising that is allowed?

Ms Karakatsanis: One of the recommendations of the advisory committee was that the advertising principles be made regulations. It is something that has to be done. The principles themselves were decided by the government and announced by the government 1 June 1989. The board took those principles and published guidelines, which basically are interpretative guidelines of those principles that the government had announced. Something like that, which affects the industry as a whole, is referred to the minister.

Mr Waters: I guess where I have concern is partially over advertisement; it is partially, I guess, over enforcement. I represent very much a tourist riding and every summer I see carnage in the lake. Thank God we do not have sharks because they would be attracted by the blood. There seems to be virtually nothing being done about this. We hear the reports of people being run over, especially since we have got these big offshore boats. I was wondering if the board had been looking at any of this.

Ms Karakatsanis: Off the topic of advertising, but dealing with carnage in the lakes, one of the changes to the legislation was that open liquor could not be conveyed in an unlicensed boat. It used to be that if you had a boat that had sleeping accommodation, it was legal for you to be drinking on the boat even while you were using it as a means of transportation. The changes to the act treat boats in the same way motor vehicles are being treated. If it is under way, if it is being used as a means of transportation, then you cannot drink on the boat and you cannot have open liquor in the boat. It has to be in stored containers or in sealed bottles. So that is one thing that had been identified by the police as a problem, and it was as a result of their recommendations that change came about.

With respect to the advertising itself, as I say, the rules should be in regulations and I believe it is the intention that the rules be put into regulations. The content of those regulations is currently being reviewed.

Mr Waters: With the boats in my riding, I think where the biggest problem -- I think Mr McLean across the way probably has the same type of problem; all of us do on the Great Lakes -- is not so much the consumption on the boat as the consumption at the bar. They float in on an offshore racer, leave the bar, get it up like this and run over somebody in a little boat. I know of places where this has been going on and there seems to be virtually nothing done about the establishment that these things are coming out of.

Ms Karakatsanis: If the police send us a report, then it is something we do follow up, and we will do an investigation, or if we get a complaint from a resident or from anyone about an establishment serving people to the point of intoxication, then we will send in an investigator and an inspector and we will follow it up, and that will often initiate disciplinary proceedings. It is an offence, of course, under the Criminal Code to operate a boat while you are impaired and that is something the police use to police that particular matter.

Mr Waters: The reason I am asking this is that I can probably name a few.

Ms Karakatsanis: I will take the names later.

Mr Waters: No, thanks. But this type of thing has been going on for a number of years, and I do not see any changes, to the point where the police park outside these places on water and on land. There are no changes and I am just wondering how much enforcement the board itself actually does with these things.

Ms Karakatsanis: The change to the act is from September, so it may make a difference next season. The police think that will be a big assistance, because in the past they have gone to boats and found liquor but nobody has actually had it in his hand, and they could do nothing. So perhaps next season that will be of assistance.

We do about 240 hearings a year and our priorities in terms of problems in licensed establishments are two: serving of underage persons and serving people to the point of intoxication. Overcrowding comes close, but those are the two main ones. We do suspend people's licences where it can be shown that they have served them to the point of intoxication. As I say, we follow up on all complaints and we deal with it in the disciplinary proceedings.

Mr Waters: Okay. I will have some more after.

Mr McGuinty: Would you tell me, please, who is required to obtain a special occasion permit?

Ms Karakatsanis: If you are drinking in a place other than your home, if you are drinking in a place that is a private place like an office or a boardroom and you are not selling it, then that is fine, but if you are ever selling liquor, if you are drinking in a place other than your home or a private place, then you need to have a permit or a licence, or you can actually do it under the authority of a caterer's endorsement to a licence. Basically, with any sale involved you need a licence or a permit. Even when there is no sale involved, if it is outside your home or a private place, you need a permit or a licence.

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Mr McGuinty: Is that working? It seems to me -- I would like a comment on this -- that maybe the government has gone a bit too far there. If a group, for instance, of 10 people get together and they rent a small hall and they are going to serve liquor but there will be no charges involved, are they required to obtain a special-occasion permit?

Ms Karakatsanis: They are unless the hall is licensed. One of the frustrating things in the past was that a banquet hall was not eligible for a liquor licence. They are now eligible, so you will find a lot of those halls that previously did not have licences will have a licence, which will make it far more convenient, of course, for the group that is renting that hall.

Basically, there are three options: You can go and get your permit, you can go to a licensed banquet hall or you can go to an unlicensed location and find a licence holder who has a caterer's endorsement who will serve liquor to you. So the options are broadened. Before September, you had two choices: You went to a licensed facility or you got a permit. The choices are much broader now.

Mr McGuinty: Do you have any notion of how many people should be obtaining special-occasion permits, but are not?

Ms Karakatsanis: Before the law was changed to make it legal to drink in your private office or boardroom, I would have said there was an extraordinary number of people who were drinking without obtaining a permit. It was well known. Now that it is legal to consume in those kinds of private premises, my guess would be that most people obtain a permit. It is fairly well known, but I do not have any information on that.

Mr McGuinty: Tell me, please, if I can pursue this a bit further, what is the thinking behind the necessity of applying for a special-occasion permit for a private function where they are just simply serving liquor, a small group particularly?

Ms Karakatsanis: I guess that by making consumption legal in a private place there has been a recognition of the fact that where no sale is involved and it is essentially an extension of your private residence, you should not have to have a permit. When you go into a banquet hall, however, and that is specifically excluded from the definition of a private place, you are talking about a location where somebody is making his living renting out the facilities for use during functions where liquor is sold and served, and generally those are the kinds of locations that should be in compliance with the liquor legislation and where typically there have been problems in the past.

Certainly the law enforcement agencies identify permit functions, those kinds of functions, as being the source of a lot of difficulties, a lot of service underage, service to the point of intoxication. There have been a number of inquests resulting from deaths that occurred as a result of over-service at permit functions.

It is an area where I, frankly, would prefer to see those functions conducted -- if they are truly private in a private place, that is fine, but if it is as part of a business then I prefer to see it conducted under a licence, because those people who hold licences have expertise. If they breach the rules we know where to find them, and they have something to lose. The problem with permit functions is that if there is a problem at an event, we can issue an order that they not be given another permit, but it makes no difference because their neighbour or their friend or their spouse or their brother or sister will just apply for the next one. Effectively we do not have that control in permit situations. I have gone beyond your question.

Mr McGuinty: I think what you are telling me, and correct me if I am wrong, is that you would prefer to do away with the opportunity for a private individual to apply for a special occasion permit.

Ms Karakatsanis: I think the opportunity has to be there, because it is not always going to be convenient to go to a licensed hall or a caterer's endorsement, and there are some smaller communities where they may not have licensed halls. I think the option has to be there to accommodate those people for whom it is more convenient.

Mr McGuinty: But if that person applies for that permit, he does not receive any special education or training; it is just essentially paperwork.

Ms Karakatsanis: They do not receive any training. There is a pamphlet available to them at all the liquor stores. It is a bulky pamphlet, which I am sure most people do not take the time to read. We are hoping to design one that is a little less intimidating and that could be read a little more readily. That is going back to the issue of what training should be provided, and it is now essentially private functions. Those are not typically the problem kinds of events. It is usually the larger events where you are going to find problems, and that is the area where we should look at the issue of training eventually.

Mr Hayes: I notice that from 1986-87 you had 155 office staff. It went up in 1987-88, for one more person. Between 1988 and 1989, you had 149 people on staff; that is reduced by three people. Is that through attrition, three people retiring?

Mr Tocher: Basically, a turnover in staff.

Mr Hayes: You have less staff, yet from the 1988-89 to 1989-90 budget you have increased by over $563,000. Is this for severance pay or something? Could you explain, because in 1990-91 it appears you are going to have 140 office staff. You would think that when you reduce the staff the cost may go down, but in this case it does not appear that way and I am just wondering what the reason would be.

Mr Tocher: With the figures for the last couple of years, you are comparing apples and oranges. We went to Management Board. I believe it was back in 1989, and received additional funding to implement the changes to the Liquor Licence Act. We received a large amount of money to computerize the functions of the board. Some of that money was for contract staff, some of it was for consultants, so even though our regular staff strength has been dropping we have had an injection of special funding for a period of a couple of years to bring in the changes to the act and the regs and the technology. The staff we hired to do that were primarily consultants who were coming in and out. Contract staff does not show up in the regular head count of the board. Our actual staff strength today is around 148 or 149 people.

Our salary budget actually will drop next year to reflect the fact that these projects are complete. In fact, our total budget next year is going to be somewhere slightly over $9 million. It reflects the fact that the computerization and the implementation of the act and the regs has been brought to completion. Our budget will actually drop and will reflect the number of people we have on board on an ongoing basis.

Mr Hayes: I see here that even for your services, you have a $176,000 increase there too.

Mr Tocher: That is right. We bought a minicomputer. We had to hire outside consultants, we had to hire people to produce all the new procedures manuals. We redesigned all of our forms. A lot of that work was done with outside help and contract staff.

The Chair: Do you have the ability under the act to charge the LCBO if it in some way, shape or form violates the provisions of your act?

Ms Karakatsanis: No. Our jurisdiction is just over licence holders.

The Chair: What is the relationship between your board and the LCBO?

Ms Karakatsanis: We are two completely independent bodies. We do have a co-operative relationship in the sense that senior management meets regularly to discuss issues that are of mutual concern. They do refer to us their advertising and promotions when they are in doubt, or if there is anything special they are considering doing they will refer to us for advice in that area. Barry, perhaps you want to address the actual liaison between the two.

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Mr Tocher: We have set up a formal structure at the management level. The senior management of the liquor licence board and the senior management of the liquor control board get together on a quarterly basis. We have a formal agenda and we discuss issues of common interest. Things on that agenda might include, for example, problems we are having in issuing permits through the LCBO store system, or there may be issues with regard to some of the things we are going to be taking over in future, such as the delivery licence the LCBO is now issuing and we are going to be taking over.

There may be some policy issues we are working on jointly. The question of advertising is something we work closely with the LCBO on. In fact, our manager of advertising and promotion sits on a special committee the LCBO has that reviews all its advertising. We are plugged into their --

The Chair: That gives us a general idea that there is a fairly close relationship. What I was getting at essentially was that the idea of why there is a necessity for two separate boards was raised this morning in our briefing session. Has there ever been a review, to your knowledge, to take a look at the feasibility of having one board rather than the two?

Ms Karakatsanis: It was one of the issues addressed by the Advisory Committee on Liquor Regulation. There would be a real conflict of interest, I think, if you combine the two boards into one. The LCBO is a revenue producer. Its function is to sell liquor. It markets it, it produces a lot of revenue, it is a marketer. We are the regulators. Our interests will often result in decreased per capita consumption of liquor. There is a real conflict of interest, and I think to combine that under one board would mean that the commercial side would dominate. There are 5,000 people on the commercial side, and I think they would really overshadow the regulatory side.

There are three liquor boards across the country that are joint, that do have under one board a commercial and a licensing function, and the remainder have separate boards.

The Chair: Until now that argument has held sway in Ontario.

I think it was last year that Labatt was fined $500,000?

Ms Karakatsanis: Last January there were proceedings against Labatt on a number of bases, including failure to obtain approvals for some of its advertising and for promotions that were not permitted under the legislation. Labatt admitted the allegations at the time and there was a joint submission by counsel for the board and Labatt which resulted in the decision of the board, which included a term and condition for the payment of $400,000 to be donated to charitable organizations for alcohol and drug abuse programs, and also included the prohibition of Labatt from advertising its Labatt's Blue and Labatt's Blue Light for a period of three months, 4 January to 2 April. This was the third time Labatt had been before the board for violating the legislation, which of course is reflected in the severity of the fine.

The Chair: I was just curious about the severity of the fine. Some of us sitting on the sidelines are looking at what certain polluters in the province, for example, have been hit with in the past, etc. I guess it is a pretty subjective thing. How did you arrive at that figure?

Ms Karakatsanis: There were a number of previous decisions of the board relating to brewers. It started off with, I believe, a decision against Amstel which required a payment of -- was it $50,000? I cannot remember what the figure was, but there has been an increment with each proceeding. The first one involving Labatt in February 1988 provided for the contribution of $120,000 to designated alcohol treatment prevention organizations. Then there was a further hearing in December 1988 which prohibited them from engaging in certain promotional activities for a period of two months. There were proceedings against Molson in December 1988 which required either a $300,000 or $350,000 payment to alcohol abuse programs. So you can see the increment in the proceedings.

The Chair: Just a question of process. When the board or whatever group within the board has reached a conclusion about the size of a fine, do you run that by your political masters?

Ms Karakatsanis: Absolutely not. When it comes to the actual application of the act to individual circumstances, the board is completely independent. When it comes to broad policy or making the legislation, that is a function for the government and the Legislature, not the board, but with the actual hearings we do, the members conducting the hearings are those who make the decision. I would not presume to tell members what decision to make in a particular case.

The Chair: To follow up on that, tying in what you have just said with the speedy issuance -- to some people, in any event -- of the SkyDome licence, which seemed to be expedited, I guess there were questions in the minds of some people about how that was handled so quickly when other matters would face a lengthy ordeal, if you will.

Ms Karakatsanis: You see, there is no category of licence called a stadium licence. Before we can issue a stadium licence, it has to be done by regulation. So that has a political component. We look at the application, we look at the facilities, we ensure they comply, in the same way we would any other licensed area, but the decision whether or not to issue it has both the requirement for approval by the municipal council, approval by the board and of course requires a regulation change, which means it is the government's decision.

In the case of the SkyDome, there was an advertisement. The actual application for the licence was in many, many months before the licence was issues. I could get you the exact number of months, if you like. I do not think you will find that from the date of the application to the issuance of the licence it was any quicker than any other licence. Perhaps the process for actually passing the regulation was quicker, but that is something that is outside of our particular responsibility.

Mr Grandmaître: On licensing, I know you work very closely with municipal police, the Ontario Provincial Police and the like. Do you consult police commissions before you issue a licence?

Ms Karakatsanis: No. We advise the municipality. We give them a chance to object. We require some information from them, as a matter of fact, whether the status of the area is wet or dry. They have to advise us if the premises are in compliance with the health and zoning bylaws. We go to the health and the fire people for compliance letters in those respects. We do a police check on all applicants, so police are advised of all the people who apply for a licence, but we do not check with police commissions per se. I do not know what they could add to the proceedings, when the police themselves are clearing it. It has never been suggested before.

Mr Grandmaître: Sometimes police commissions know things that the police departments do not know. That is why I was asking my question.

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If you were to receive a resolution from a municipal council objecting to a licence, what would you do?

Ms Karakatsanis: Objecting to a particular application? We would consider that as an objection which would require a public hearing. It would go to a hearing. The board cannot delegate the issue, about whether the issuance of a licence is in the public interest, to a municipal council. The board under the act must make that determination on its own. However, a resolution of the elected council of a municipality would be very cogent evidence, in my view, of what the needs and wishes of the residents in that municipality are. Where there is a resolution objecting to a licence, it has much more force than another objection just registered by an individual, but it does not determine the issue.

Mr Grandmaître: If a municipality were to enact a bylaw restricting the number of establishments in a community, how would you react to this kind of bylaw?

Ms Karakatsanis: There have been two resolutions passed in Toronto requesting the board not to issue licences in a particular area. That would be treated as an objection to any application in that area. If the municipality passes a zoning bylaw, then the board would not issue a licence if it were not in compliance with the zoning bylaw. Before the board can issue a licence, premises must be in compliance with zoning bylaws of the municipality. That is in the regulations. Even if the board approves an application, it is always subject to compliance letters from the municipality in that regard. If we do not get the compliance letter, the licence is not issued. If it comes by way of a zoning bylaw, then that determines the matter. A municipality can, for example, say, "In this particular area we will not permit licensed establishments," and that would prevail.

But a resolution would fall into the previous category I mentioned. It is an expression of an objection, in which we would not have jurisdiction, just to delegate to them. I have to tell you, they are the hardest kinds of hearings, the public interest hearings. It is very difficult to do.

Mr Grandmaître: I know. I have tried it and it did not work. Maybe I should talk to you after.

Mr Frankford: This committee will be looking at appointments to boards and commissions in a general way, so I was wondering if I could ask some questions giving us some guidance on that.

Looking at the résumés of the members, I do not see any particular pattern except that several of them seem to be lawyers.

Ms Karakatsanis: When we do our hearings, I like to have at least one member of the panel who is a lawyer. I think it is important to have lay members, because lawyers tend to have a very particular perspective on things and it is good to be reminded of the real world from time to time. It is important to have that mix. But I think it is also important, when you are doing a hearing, where both parties are usually represented by lawyers, that you have one of the members as a lawyer. That is why you find more lawyers and that is why I would view an ideal board as having half the members as lawyers.

The chartered accountant comes in very handy. One of the things we have to look at is financial irresponsibility if it is going to impact upon the operation of a licensed establishment. Certainly, in proceedings we have taken for outstanding fees, it has been invaluable to have somebody who has better expertise in understanding some of the financial evidence that comes before the hearings.

With the remaining board members, you will see it is roughly half and half in terms of gender. There is representation from some of the ethnic groups that are traditionally represented in the hospitality industry. We have somebody from the Chinese community -- actually we have two people from the Chinese community right now -- we have a francophone, I myself have a Greek background. We have somebody from Goderich, somebody from Hearst, somebody from Ottawa -- there is geographical representation -- from Cobourg and Toronto. I do not know what would be a perfect mix, but right now the board is really a very professional group of people.

If you are asking me about guidance with respect to the two new positions --

Mr Frankford: I do not want to talk about the particular positions. Let me pick up on your saying some groups that have been represented in the hospitality industry. Could it not be argued that that is inappropriate? Should it not represent the consumers rather than the --

Ms Karakatsanis: Okay, I think you have to represent everybody. Two of our members have served on municipal councils in the past. One of our members was a solicitor for the council. Another one was responsible for bringing up to Kapuskasing the first hostel for battered women. There is a lot of community involvement and community experience among the members and I think that is a very important component. I would like to see perhaps somebody from the public health aspect on the board as well. But I think there has to be some understanding of how the industry works as well, and when I refer to the ethnic mix, I think you have to understand your constituents and the ethnic mix is there in the general public as well.

Mr Frankford: But is not the main impact of licensing premises on, shall I say, town planning, community development, how many pubs or whatever you have? Surely that is more an impact on an area. I do not really see why it is a public health concern. It relates to the character of towns, whatever.

Ms Karakatsanis: I guess it has been my experience that people consider themselves experts on liquor. Everybody feels they are impacted by liquor. Residents feel very strongly about licensed establishments that are in their backyards. Police are concerned very strongly about establishments that are problem establishments, where there has been over-service or service to minors. Municipalities are concerned when it becomes a land use issue. I think it has a very broad impact and I do not think that it would be fair to characterize it just as a land use issue; it really covers the whole spectrum, in my view.

Mr Frankford: Our understanding is that the government will be taking applications. Can you envisage the sorts of people who will be applying to get on this particular board?

Ms Karakatsanis: As I say, I would have to say that I would like to see somebody from the public health perspective and perhaps -- it is really not my place. The appointments are made by the government. I as chairman can identify a particular need and one that I can identify is the need for a public health perspective, but it is really not my place to --

Mr Bradley: I would like to look into the matter of how you control drinking under age in establishments and what penalties you have. It would be a casual observation of many people in the province of Ontario that, despite all of your efforts, there are still people who are under the legal age for the consumption of alcohol who are doing so in the province of Ontario, in various parts of the province. Recognizing that we do not have a million-person police force or that you do not have all the people you would like to have, how do you control that, first of all? And second, when you have found a violator, what penalties do you apply to that violator?

Ms Karakatsanis: I mentioned earlier that that is a priority and it shares first place, I think, with over-service, service to the point of intoxication, so that is a priority with the board.

A number of the recent changes assist us, I think, in controlling that area. One of the ones I mentioned earlier was the new obligation on a licence holder, a new offence, that prohibits them from allowing a minor, somebody under the age of 19, to have or possess liquor in the licensed establishment. There is a new offence -- it is not exactly new; it has been broadened -- where nobody can present false identification to pass themselves off as legal drinking age. You attack it from the point of view of the person who is under age who is giving false identification.

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We do have disciplinary proceedings -- if I can just refer to the statistics for a moment. To date, of the 394 proposals issued, and that includes public interest proposals, 40 of them would have related to minors, the service of minors unlicensed establishments. The penalties, of course, vary in court. If a licence holder is convicted, then there is a minimum seven-day suspension. It very rarely is that the actual holder of a licence is convicted. It will often be a manager or a principal of a corporation or a waiter who is convicted.

Just from my experience of sitting on the hearings, I can tell you that if somebody comes before us for the first time with a service of a minor and they had a previously good record with the board and they have taken steps to prevent it but somehow the minor was there, they would be looking at something in the range of a five-day to seven-day suspension. The second time they are up, the proposal is issued for -- they might have a 14-day suspension and the third time the proposal is for revocation. The suspension means that they have to post a big yellow sign on their premises saying that they are not permitted to sell and serve liquor by way of board order. The minimum fine in provincial court is $500 and often we find that a suspension, even of five days, has a much greater financial impact on a licence holder than would a $500 fine or a $1,000 fine.

Mr Bradley: In regard to the other problem you made mention of -- and I think you mentioned that you had talked about this a bit perhaps in your initial remarks or in response to some questions, so if you have spent a lot of time on it I do not want you to have to repeat it very much -- but the second issue which is coming to the forefront, more because of legal suits than anything else, is in fact the control of those who are consuming beverages on a premise, and we recognize that it is a difficult thing to do in some cases for proprietors. How are the changes being effected now in that regard, getting better control over people who drink to excess and then become either violent or become a problem when they leave the premises?

Ms Karakatsanis: One of the measures I think that will go a long way both for this issue and for the previous issue, minors, would be server training. I briefly indicated the nature of the topics covered in server training. There is a server training course currently offered by the Addiction Research Foundation. It also goes into what the law is. There are regulations that say you would be wise to accept, or it was a defence to accept certain kinds of identification, photo identification only. Server training, I think, is probably going to be in the long term the most effective way to get at it. I am not sure that I answered your question fully.

Mr Bradley: This is a very difficult question as well because it is going to vary. How much co-operation do you get from police forces in dealing with people? Obviously, a waiter or waitress may have a difficult time dealing with somebody who has consumed a lot of alcohol beyond that which would make the person legally able to drive, perhaps to the extent of becoming either obnoxious or violent or otherwise troublesome within a bar. Is there a reluctance of police? Do they see that as a business of the bar or do you get the co-operation of the police in a general sense in dealing with those matters?

Ms Karakatsanis: I think in a general sense there is a co-operation with the police. I think there is also somewhat of a reluctance on the part of a licence holder to call in the police for assistance if he feels he can handle it himself. They are always worried about charges that might be laid, consequences, but we definitely advise them through our seminars to call the police if they need assistance. We point out to them that they do have the authority to ask somebody to leave if they feel that that person is going to be a problem. Often they are concerned about exceeding their jurisdiction. They say, "Well, can I throw anybody out just because I think they're going to be a problem?" So that is something we do try to advise them on through our training and our licensing newsletters and so on. Most of the police forces are quite co-operative.

Mr Bradley: That leads into the question of the control of bouncers, for want of a better word, who are employed by these establishments. Many of them, as you say, do not want police in there because the police may observe something else they may press charges on, or if there is a melee in the establishment it is bad publicity if the only flying saucers in the community are not those which eccentrics see out their windows, but rather are flying around the beverage room and therefore they employ bouncers.

What kind of control do you have over bouncers, because again, you read various stories about bouncers who have -- Well, they do not have an easy job by any means. Sometimes the people who will take jobs as bouncers are bullyboys, and we hear of people being badly injured or sometimes even fatally injured as a result of bouncers' activities. Do you have any control over bouncers?

Ms Karakatsanis: We do not control the employees per se; however, we take the position that the licence holders have to discharge their responsibilities and obviously do so through their staff. They are, inmost cases, responsible for the actions of their staff. We have had proceedings where we have brought a licence holder forward because of unlawful activity by the bouncers, including assaults. Ultimately the licence holders are told they are responsible for what happens in their licensed establishment. Over the bouncers, per se, we have no jurisdiction over employees. Our jurisdiction is over the licence holder.

Mr Bradley: You also have a problem, or people have a problem with neighbourhood noise and litter and activities; beer bottles flying through windows or broken glass or something. What control do you exercise on licence holders to ensure that there is not excessive noise which keeps people up in the neighbourhood?

I recognize that there is not much control over the noise within the establishment, even though the eardrums are being adversely affected perhaps, but there are neighbourhood problems where noise exists in a residential neighbourhood, particularly where the hotel or the establishment was there first and the local municipality sees fit to have houses built beside the sewage treatment plant at one end of the city and right beside an established premises the next time, which speaks to municipalities and their zoning bylaws. How do you control that?

Ms Karakatsanis: We have the jurisdiction to attach conditions to a licence or to suspend or revoke a licence if the continuation of a licence is not in the public interest, having regard to the needs and wishes of the residents.

Probably the biggest problem in cases such as those is identifying that the people who are causing the problems have come from a particular licensed establishment. That is particularly true where there is a concentration of licensed establishments and it is very difficult to establish that in fact they have come from a particular licensed area. So that is a practical problem.

We do follow up on complaints by residents and there have been hearings where licence holders have been either suspended, where it was felt that they were not concerned at all about the impact of their operation on the residents, or where an early closing has been imposed upon a licensee. But, as I say, it is very difficult to make out a case in those circumstances.

Mr Bradley: Two questions in this regard; the Chairman led into this a while ago or made reference to it to a certain extent. What has been the experience of the board with its licensees who are licensed to serve alcoholic beverages in sports stadia in the province of Ontario? We have the Dome, which is one place; I guess you can serve it at football stadiums -- is that not correct? -- Lansdowne Park, I suppose, and --

Mr Grandmaître: London.

Mr Bradley: -- London now. Number one, what has been the experience with that as far as the board is concerned? And number two, what action are you at least thinking of to ensure that those who wish to can enjoy the game without loud, obnoxious, obscene louts interfering with the enjoyment of a game for people in a family? Are you encouraging or now requiring that there be sections where the drinkers do not go and that somebody can go with the public? If they want to do that I guess they do it, but I guess I feel for people who feel they cannot take the family any more because of the drinking.

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Ms Karakatsanis: There are the regulations. Changes to the regulations require that there be non-drinking areas in various price ranges. We go over the plans with the stadiums to make sure that there are a reasonable selection and reasonable seats. We have done that with all the licensed stadiums and there are non-drinking areas, or what we call dry areas, in all of the stadiums at the various price ranges and the seats are not bad.

As well, with the recent changes to the regulations under stadiums, all servers of liquor plus the security personnel have to be trained. So they have all undergone server training. All the people you see dispensing liquor and the security personnel in the stadiums have been trained.

The experience of the board, and obviously it is something that has to be monitored quite closely because of the volume, just the sheer number of people you have, is that if there is a problem the scale is just so large. We monitored very closely the most recent licensed Labatt Park in London, as well as the SkyDome, and really there were very few problems. The police are very much involved. There are paid-duty police involved in the operations. There are regular meetings between the inspectors, the police and the stadium owners and there are not that many problems.

I believe there are five or six stadiums now which are specifically licensed by regulation: SkyDome, Varsity Stadium, Exhibition Stadium, which is not currently operating, Ivor Wynne Stadium in Hamilton, Lansdowne Park in Ottawa and Labatt Park in London.

Mr Bradley: One control, most people who have been to the Dome would agree, on the consumption of alcohol at the Dome is the prohibitive price of the beverage being offered and that occasion is enough to drive anybody away from those places, if they wanted to go there in any event. There are other places, however. We may have noticed local arenas have a room or something at the side. I was in the Kitchener arena once and there is a room where you can go to drink. In Hamilton's Copps Coliseum I remember there --

Ms Karakatsanis: We had problems there.

Mr Bradley: -- they have places where you can go to consume. Is that fairly prevalent now?

Ms Karakatsanis: That is different from the stadium licence, or the licence in the stadium, which is where all the stands are licensed. In Copps Coliseum, for example, there is a regular licence issued to an area which is partitioned for the sale and service of liquor. In the stadium operation, liquor can only be sold and served during professional football, baseball and soccer games and that is it. In these other locations which have a regular licence, which are not in the stands, they can be open regular hours.

We have had some problems from some of those locations, and there were proceedings against Copps Coliseum. They had certainly taken many, many steps to ensure that the problems encountered in that particular case would not be repeated, and those steps were persuasive to the members who were hearing the actual case.

Mr Bradley: What about licences near schools? We hear stories sometimes from teachers who say that some students may come back from a local nearby establishment, if it is within walking distance -- not that it has to be a bar in itself or anything -- in worse condition to do their work than when they left, say, at the beginning of lunch hour. Is there a general policy you apply? What criteria are there, as far as licensed establishments particularly near secondary schools?

Ms Karakatsanis: If there is an objection to an application on the basis that it is near a secondary school, then that is obviously a very relevant factor and it is considered carefully. What would be looked at in those circumstances is the nature of the operation, whether or not students would be welcome or likely to attend and so on.

There are, for example, cases where obviously the price and the menu of a licensed establishment are not likely to cater to students, and perhaps restrictions on a licence would make it so that it does not pose a problem. But it is definitely a relevant consideration. I cannot say that there is a general policy. Every application is looked at on its own merits by the members looking at the application, but I can tell you that it is a factor that would be considered seriously by the board members.

Mr Bradley: A final question, because the Chairman may have other names on the list of people who want to ask questions: I heard you mention as well the character of applicants. How do you ensure that a member of organized crime or an otherwise disreputable person does not get a licence or have an interest in -- if not the name on the application -- the operation of an establishment? How do you do that in light of the freedom of information and privacy acts that we have and the stipulation that someone's record does not stay for ever and ever, amen?

Ms Karakatsanis: We do police checks on the applicants per se.

Mr Bradley: Can the police supply you, though, with the information you want?

Ms Karakatsanis: We make the applicants sign consents. It is part of the application process. They have to consent. You see, it is a right to have a licence, but it is qualified by the public's right that it not be issued to somebody whose past conduct is such that it would provide reasonable grounds for belief that he will not carry on in accordance with law, honesty and integrity. Clearly it is the board's duty to look at somebody's past conduct, and therefore we require that the applicants consent to the disclosure of their police records by police. It is also a question on the application and on the documentation that we ask them. "Have you ever been convicted of a criminal offence?" which is a sworn application. So we have their sworn statement which we double-check through the police.

One of the problems we had identified was a situation where, for the applicant for a licence, his or her record came to light and suddenly the application was amended, and the spouse or the mother was suddenly the applicant. That made it very difficult, obviously, because of the rights of the actual applicant who was involved. One of the amendments to the act was designed to let us get at those kinds of situations. We can look at the past conduct not only of the applicant, but of anybody who has a significant managerial or financial interest in an establishment. So where we have reason to believe that there is a problem or where the manager is identified by police, for example, as a problem, then again we can look at his past conduct, which is something we could not do before without actually making a finding of fact that we felt he was the actual applicant.

Ms Haslam: Thank you, Mr Bradley, for asking one of my questions again. I would like to ask maybe just one supplementary. What are the present criteria for determining reasonable grounds for non-issuance of a licence?

Ms Karakatsanis: It is set out in subsection 6(2) of the act. I will just refer to it to make sure I do not miss anything, although I know that by heart. A person is entitled to a licence except if (a) "having regard to his financial position," he "cannot reasonably be expected to be financially responsible in the conduct of his business," (b) he is "not a Canadian citizen or someone lawfully admitted to Canada for permanent residency and ordinarily resident in Canada." The same applies to directors and officers of a corporation. (d) The past conduct of the persons referred to -- that is the broader group I just indicated -- "affords reasonable grounds for belief" that the applicant "will not carry on business in accordance with law and with integrity and honesty."

In addition to the police check, we ask whether or not they have ever held a liquor licence and then check that file to see if there were any problems with their previous operations or other operations. We check for a false statement on their application or if they are carrying on activities that are or will be a contravention of the act or regulations -- the premises, accommodation, equipment, facilities must comply with the act and regulations -- and then finally, the public interest that I mentioned earlier, whether the licence is in the public interest "having regard to the needs and wishes of" the residents "in the municipality in which the premises is located."

I should mention that in order for the board to refuse a licence, it must make a finding that they are ineligible under one of those bases, and the onus is on the board or board counsel to lead that evidence and a finding to be made.

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Ms Haslam: I have two brief questions and both of them are regarding the stage of some of the changes that you brought in and where they are. One was the new computer system. I was very interested. You had a two-stage process and if I am not mistaken you are in the second stage. I just wanted an update on that particular issue. I will give you the other question at the same time. What is the result of the review? I believe there is a review by the LCBO regarding setting the price of beer in duty-free shops. You were reviewing this and I wondered at what stage that particular review was at.

Mr Tocher: In terms of the first question, stage l is complete and it involved the automation of the licensing and the compliance functions of the board; in other words, the inspection investigation area and the issuance of licences.

Stage 2 involves four other applications. We are developing a computerized hearing case management system. We are doing some automation in the advertising and promotions part of the board. We are going to be doing some automation in the area of SOPs and we are developing a small revenue recording and tracking system. Those four systems are roughly 50% complete and they should all be implemented by roughly the end of June of this year.

In terms of the second question, the LCBO is looking at the pricing of beer in duty-free stores to see what adjustments have to be made to address the auditor's concern. That matter is with them and they are still in the process of reviewing the implications of that.

Ms Haslam: Will they come back to the LLBO with their findings and the LLBO will then look to addressing that issue?

Mr Tocher: They have a couple of options, I guess. They can adjust the price to reflect the auditor's concern, or if they feel that the price is for some reason going to have some sort of adverse impact and they feel that perhaps the regulations should be changed, then they will have to come back and talk to us about amending the regulations and we will work with them on getting a recommendation to amend the regulations.

Mr McLean: The caterer endorsement has been mentioned. How many would there be in Ontario that would have a licence?

Ms Karakatsanis: I can tell you in just a minute. Seventy-four applications: I will just give you my --

Mr McLean: You said 74 applications, but in fact how many have been licensed?

Ms Karakatsanis: It would probably be 74 or very close to it.

Mr McLean: Are any of them in the county of Simcoe?

Ms Karakatsanis: I can find out for you.

Mr McLean: It would be interesting to know. If there are, it would save me some time getting a permit.

How much has been spent on a server training course that servers could take and has it been used at all?

Ms Karakatsanis: We have our own seminar, which we require all new applicants to take. It basically outlines for them what the laws are and we give them a booklet to take away with them outlining their major responsibilities and obligations.

The server intervention program is a course that was developed by the Addiction Research Foundation in consultation with the board. It is a program that is available. The industry associations have trainers who can also provide this training. It is approximately three to four hours long for servers and costs about $35, and four to six hours long for managers and costs $115 or in that vicinity. I could not tell you the numbers of people who have been trained. Do you know that number?

Mr Tocher: To date, I believe there are about 12,000 licensees who have been trained under the ARF's program.

Mr McLean: What amount of money would they get to do that?

Ms Karakatsanis: We have not given them any money for it.

Mr McLean: Oh, you have not.

Ms Karakatsanis: No. The fees that I mentioned are paid by the servers or by the managers to the Addiction Research Foundation. The work that they have done to date they paid for themselves. Presumably it came out of their budget; it did not come out of ours. With respect to implementing it in future, we are hoping to look at implementation that would be self-funding, but maintaining low prices for the actual servers.

Mr McLean: Special permits for sporting groups and volunteer groups: Where do you advertise or how do you make them aware of the process that they have to go through and the length of time that they have to apply before the function takes place? I have some of them who came to me. They have been on short notice and did not realize it took this long. How do you get out to the people what they have to do?

Ms Karakatsanis: Those pamphlets I was talking about would help. An application for a permit, for most social types of permits, has to be in at least 10 days before the event. In fact they are generally in less than that and we can usually process a permit for a weekend event if it is in by Tuesday. So it really does not take that long. For events that are of a nature such as a community festival or charitable events, I believe the deadline is 30 days, and again, we can process them in considerably less than that. We do not have a mechanism of letting the general public know, other than what is posted at the local LCBO store and the pamphlets that are available in all of those outlets.

Mr McLean: So there has been a change in the process of applying? It is shortened? I mean, in some cases you have to let the police know or you have get approval from the police, the municipal fire chief and all these people.

Ms Karakatsanis: You do have to let them know.

Mr McLean: You cannot do that in two or three days.

Ms Karakatsanis: No. The Tuesday to the Friday is where we have been satisfied that there has been notice to the police. If they have not been able to give notice to the police, then we would not be prepared to abridge the time and issue it in a shorter period of time. At least, that is the way it should work.

Mr McLean: I can go for another couple of minutes, Mr Chairman, if that is what you are waiting for.

The other question I had was with regard to hearings. You said two people or one person can attend a hearing. Who are the people who hold the hearings? They are not board members. Are they your staff?

Ms Karakatsanis: No, the hearings are conducted by board members. Usually it is two persons who hold a hearing.

Mr McLean: The appointed board members?

Ms Karakatsanis: The appointed board members conduct the hearings. It can be one member and we have done it in a few cases where something has been quite routine, but in most cases it will be two board members who conduct the hearing. We have had up to five board members conducting a hearing, where the hearing has been particularly significant or controversial in any way. But it is board members who conduct the hearing. There is board counsel who is staff who actually presents evidence, so the members themselves do not get involved. It is not an inquisitorial method, but it is members who conduct the hearings.

Mr McLean: I was kind of disappointed when I originally heard you say that you thought you should have half the members as lawyers, because I would have thought there were rules and regulations that you would go by, that those people who are on the board would be able to qualify to follow the rules and regulations to make a decision without having to be a lawyer. I just could not believe --

Ms Karakatsanis: It is true, that you do not have to be a lawyer to do it. It has turned out that it works easier for us if one of the members is a lawyer. If they are not a lawyer and if you are talking about just lay members, then you have to have extensive training for the members and that is not readily available. There is no central agency which provides that kind of training. Whatever training we do, we do out of our own budget, and you can imagine that when you have part-time members, it is very difficult to address that as well as we would like to.

Mr McLean: But would that member get the $125 a day, which is what a part-time board member gets?

Ms Karakatsanis: That is right. We have lawyers on our board who charge more than that for their hourly rate and yet they put in two to five days a month. There is a very strong element of public service involved.

Mr McLean: I was kind of surprised.

Mr Tocher: I want to correct a piece of information that I responded with. I mentioned there were 12,000 establishments trained under SIP; it should be 12,000 servers. There is a significant difference and I just wanted to correct that. I made a mistake. I am sorry.

Mr McGuinty: Can we go to 5 o'clock, Mr Chair, or only 4?

The Chair: It is up to the committee. I think we have enough questions here to continue for a while, in any event.

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Interjection: Are we going to be here in the morning?

The Chair: Not for this. It does not look like we are going to require the presence of our witnesses tomorrow.

Mr McGuinty: I wonder if I could touch on advertising. Could you tell me again please, what are the criteria governing your regulations or whatever? How do you approach advertising?

Ms Karakatsanis: The legislation itself is very broad. There are no criteria laid out in the actual legislation. The legislation requires that the board preapprove all advertising, period. The criteria are not set out by law. As I indicated earlier, it is the intention that those criteria be set out in the regulations and hopefully that will be the case soon.

Mr McGuinty: What are you using now, then?

Ms Karakatsanis: For years the board had advertising guidelines and directives, about 70 pages' worth of rules that had accumulated over -- how many years? Forty? About 10 years, if not more. That was a collection of directives the board had put together to give the industry an indication of how it would be using its discretion to approve the advertising.

The advisory committee, as I said, recommended that the advertising rules be put into regulations; the advisory committee actually recommended a series of principles that should guide. Those principles were modified and were announced by the government at the time; 1 June 1989 they announced that the advertising principles should be the following. I can give them all to you if you like, but generally speaking they are that advertising must not promote consumption in general, advertising must not appeal directly or indirectly to youths, advertising must not depict illegal situations, consumption situations.

Mr McGuinty: Tell me something about so-called lifestyle advertising.

Ms Karakatsanis: The basis for dealing with lifestyle advertising is the principle that advertising must not promote the consumption of liquor in general. As an interpretation of that rule, the board has a guideline that says it will not approve advertising that suggests liquor is required for personal success or -- I should give you the exact wording: "An advertisement must not imply that consumption of liquor promotes or is required for social acceptance or personal success, enjoyment of any activity or fulfilment of any goal or resolution of social, physical or personal problems."

The problem in this area is defining what kind of lifestyle it is you want to prohibit. I do not think anybody would object to a healthy type of lifestyle. You see ads that say, "Don't drink and drive." That is promoting a particular lifestyle. You see ads that may talk about being around Thanksgiving, a family dinner; again, that is promoting or suggesting a responsible, moderate approach to drinking. Defining the kind of lifestyle you want to prohibit is very difficult, and I would be very thankful to anybody who could give me a definition of what kind of lifestyle it is that should be prohibited. It is definitely an area in which there is general concern, however, that we are looking at.

Mr McGuinty: Are there any rules governing advertising on billboards with proximity to schools?

Ms Karakatsanis: There is one rule. It would be under the minors one. "Stationary outdoor advertising may not be placed within 200 metres of a primary or secondary school."

Mr McGuinty: In your opinion, is that sufficient distance? Is that accomplishing its objective?

Ms Karakatsanis: I think the general principle is that advertising should not appeal directly or indirectly to youths, the ads themselves should not be such that they would appeal to youths; if you do that, if the placards would not appeal to youth, then whether they are 200 metres or 500 metres should not really make a difference. I think it is important to focus on ensuring that advertising does not appeal to youth.

Mr McGuinty: Labels on bottles containing an alcoholic beverage: We have markings now on cigarette packages which warn of hazards of smoking. Would labels of an equivalent nature dealing with drinking fall within your jurisdiction?

Ms Karakatsanis: It would probably come under our legislation, but it is a matter primarily which the LCBO and the ministry and the government would be interested in. I do not think there are any real policy issues.

Mr McGuinty: It is just that if the LCBO is in the business of marketing, to use your term, and you are in the business of regulating, I think it would be a conflict for them to try to limit the amount they are selling.

Ms Karakatsanis: I do not want to do my sister board or cousin board a disservice. They are in the business of marketing within the context of social responsibility. There are many things they could do but do not do because they do not feel it would be socially responsible. That is qualified, and I should qualify it.

But they would be in a position to advise the government with respect to what implications, if any, it would have on the industry and on employment, whether it could be done easily in terms of actually carried out and put on the bottle, what the costs involved would be. We are not in a position to give very much advice on that issue.

Mr McGuinty: Your board has not given any consideration to that, then, I gather.

Ms Karakatsanis: No. We feel that there are other people more appropriate to look at that issue. I do not see that it would impact upon our board. I do not want to say we have not considered it at all, but it is just that there are other groups that can make a better contribution to that issue.

Mr McGuinty: There was a general statement you made at the outset and I have read it somewhere here, that your overall function is to promote the healthy use of alcohol, something to that effect.

Ms Karakatsanis: That is a statement we have adopted ourselves, a statement of purpose that we felt reflected our goal, which was "to regulate the service and consumption of beverage alcohol in the province of Ontario in a manner consistent with the promotion of moderation and responsibility."

There is a real balancing act involved in liquor regulation. On the one hand, you want to look at access of liquor for the responsible drinker. On the other hand, there is the social cost associated with alcohol abuse. There is the issue of businessmen and employees who make their living as opposed to neighbours who want quiet enjoyment of their property. There is this constant balancing act. I guess we felt that our mandate was to regulate in a way that would be consistent with moderation and responsibility, with the emphasis on regulation; just so we would not do anything inconsistent with moderation and responsibility, to keep that in mind as the direction we should be looking.

Mr McGuinty: Given that principle, and given also that it is my understanding that the social and economic costs involved with the abuse of alcohol are far greater than the abuse of substances banned under the Criminal Code, do you not think your board should be promoting labelling of alcoholic beverages which would indicate to a consumer that they are potentially addictive?

Ms Karakatsanis: We can say that labelling would not pose an administrative difficulty to our board. We can say that we have an opinion on the matter, but broad policy issues are really the function of the Legislature and the function of the government. We are there to administer the decisions made by the Legislature. I can give you my opinion, but it is just an opinion.

Mr McGuinty: I will take it.

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Ms Karakatsanis: It is really not my place to make those kinds of -- as I feel that we are very independent when it comes to applying our legislation to the particular facts before us and I will not take any interference with the process, the flip side of the coin is that I also appreciate that, when it comes to policy, you folks are the ones who are elected to do that, not me.

Mr McGuinty: I appreciate that. However, given that you are on the front line of administration on this board, I really would appreciate, and I am sure the other members of the committee would, having your opinion with respect to that labelling. Your personal opinion; we understand that.

Ms Karakatsanis: I do not know how appropriate it is to give my personal opinion, because I am not here testifying in my own capacity. I am here testifying as the chairman of the Liquor Licence Board of Ontario. I know this whole area of labelling is something the minister is actively reviewing at this time, he is actively reviewing the issue of warning labels on bottles, and I just do not think it is appropriate that I give my personal opinion in this circumstance. I just do not see the relevance of my personal opinion.

Ms Haslam: I agree.

The Chair: I would like to pursue this for a second. When you mentioned that the advertising guidelines are being reviewed, I just wonder who is involved in that review. I know you said your board has input. Are the breweries, those who would be impacted by changes, being consulted? Are they involved in the process?

Ms Karakatsanis: Yes, they are being involved in the process. Public health groups are being involved in the process. All of the groups that have been identified as being impacted upon are being consulted, and that consultation process is still in place.

The Chair: Can you tell us, and you may not be able to and I understand that, if there is any consideration being given to a complete ban on advertising?

Ms Karakatsanis: As I say, the issue is currently under review by the minister and that review is not complete.

The Chair: I have one other quick comment which in a way ties in with this; Mr Bradley's question about underage drinking. I have not been able to find a statistic in here. I am not sure how this process works, but how many charges have been laid with respect to serving minors over the course of the past year?

Ms Karakatsanis: Charges by police? That I could not assist you with.

The Chair: How do you get involved in that? Simply, if there is a charge levied by a local police department and someone is found guilty of consuming alcohol products underage in a given premise, do you act upon a police charge and a court conviction? How do you do this?

Ms Karakatsanis: We act whether or not a charge has been laid. Police routinely file with us any reports of problems in licensed establishments, so we will follow up on that. We will follow up on complaints. Sometimes parents complain or competitors complain. We will follow up on complaints or police reports or an inspector's report.

The Chair: If an inspector in one of your spot inspections goes into a pub and sees people in there whom he suspects to be underage, what does he do about it? Does he call a police officer? Does he confront these people? What happens?

Ms Karakatsanis: The report is submitted to the board. There is a review committee at the board that looks over these reports and will determine when follow-up investigation should be made. Then, if the committee views it and feels there would be enough evidence to take it to a hearing before the board, a proposal is issued. The proposal would be to suspend the licence for a period of time for service to a minor. To date, there were 40 such proceedings instituted, the year to date, which would be about nine months. Last fiscal year, 40 proposals were issued.

The Chair: I guess I am having trouble with the concept of an inspector making a spot inspection. I gather none of these were initiated as a result of an inspection by one of your people?

Ms Karakatsanis: Yes, a spot call would initiate this. I am just giving you the various sources. A spot call would form the basis for this and it frequently does.

The Chair: In the auditor's report he mentions one of the time-consuming responsibilities of inspectors: liquor disposal. I just wonder if you could elaborate on that.

Ms Karakatsanis: That is gone. The act used to say that liquor was forfeited to the liquor licence board. The act has now been amended to say that liquor is forfeited to the crown, so the police can do their own liquor disposal. The liquor licence board is no longer involved in that.

The Chair: This is pouring it down the toilet essentially?

Ms Karakatsanis: Sink.

The Chair: Okay, sink. Mr Waters.

Ms Haslam: May I make one quick comment? I am sorry, Mr Waters.

The Chair: Sure; go ahead.

Ms Haslam: It is along the lines of Mr McGuinty and as an additional question -- the fact that you are reviewing the advertising. I find some of the advertising offensive, not just for the liquor but for the equity of feeling I have about the use of women in some of those ads, the fantasy ads where the women come out of the pool and that whole concept of being an integral part of the beer commercial, and that is what makes it a particular lifestyle or a particular pleasure. I just want to go on record as saying that when you look at advertising and the lifestyles, I feel that type of fantasy ad should also be under review.

Ms Karakatsanis: That issue is under review.

Ms Haslam: Thank you. I just wanted to get on the record as saying that there are many issues in those advertising things that should be looked at.

The Chair: You simply do not want men to have equal exposure.

Ms Haslam: I will just come right over there and -- careful, careful.

Mr Grandmaître: I didn't say it.

Ms Haslam: I'll get him later.

Mr Waters: I just have a few quick ones. One has to do with the appointments. I believe you are now appointed to five years and then a further five. Is that how the system works?

Ms Karakatsanis: No, it has tended to be more three and three. I have another two years left on my appointment.

Mr Waters: How do you feel that system works? Basically, what I am getting at does not deal only with this. You are the second group we have had in, and being new at this I just want to get a feeling for the appointments system, how the people who are appointed feel about it.

Ms Karakatsanis: It takes a while to really learn your area. I was fortunate in that I was appointed as a part-time member of the board back in February 1986 at the time that all these changes were occurring and at the time when we really had a fresh start, so I was familiar with a lot of the issues before I was appointed full-time. That is an advantage many people do not have, so I would think that you would want to ensure that appointments were long enough so that people could actually learn their area and then you would get some value from what they have been able to learn.

I personally am comfortable with the system and with the length of time. In this particular case we have actually achieved quite a bit and I am rather proud of what we have done. If we can get it running smoothly and do some of these other things that we have in mind, then it will be a good time to be thinking of going on.

Mr Waters: You do not seem to find any difficulty then in getting people to go on the board?

Ms Karakatsanis: We do have difficulty getting people to come on the board because of the amount of time required. Asking somebody to put in a day a week when he or she is a busy professional is asking a lot. There are many good candidates I know were not in a position to accept an appointment because of the amount of time required, so that is a problem.

Mr Waters: I have just a couple of other things. When you talked about licensing and you go through the hearing procedure, at no time did I hear you mention -- does anybody ever actually physically check out the establishment?

Ms Karakatsanis: In each and every case, before a new licence is issued, there is an inspection. The inspector makes a final inspection and physically visits the premises, as well as obtaining compliance letters on building, fire and health. Yes, a new licence is not issued without an inspection by the liquor inspector.

Mr Waters: My concern was in small communities.

Ms Karakatsanis: You never know what you are going to -- you have to take a look.

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Mr Waters: Yes, they could get a letter and it may not be anywhere near up to what the requirements are. The other thing I wanted to ask about is, is it a normal situation for a representative of a manufacturer of alcohol to obtain permits for clubs and individuals for special occasions?

Ms Karakatsanis: I understand that happens. Yes, it does happen. They do so as agents for the club or for the function. They are not doing so in their capacity as agents. They sign the application as agent for the club. It is a convenience that is done. I think when you look at a caterer's endorsement, that is the kind of convenience that will be offered under that instead of having the agent-manufacturer. It is not something that we like to see, but it does happen.

Mr Waters: My concern with it would be that I think under normal circumstances a person goes into the local LCBO and gets the permit and those people have an idea who the individual is. The other way, when it comes sometimes at third or fourth hand or arrangements are made over a phone, nobody actually even sees the person who is requiring it until the day he picks up his alcohol.

Ms Karakatsanis: You have to balance different interests. There is also the convenience factor as well. To make an applicant appear personally and sign on the spot in front of a liquor clerk would not in all cases be convenient and there would be a lot of groups that might have difficulty doing that. I guess in law it is pretty hard to stop somebody from signing as an authorized agent for somebody else. I guess it is something we really have not given much thought to. It is something we could look at, though.

Mr Waters: I would think you would want to have at least somebody sign who was going to attend the function.

Ms Karakatsanis: They are supposed to sign it. They do sign it, then the liquor agent takes it in for them to the store and gets it, but it is always signed by the applicant.

Mr Waters: I hate to differ --

Ms Karakatsanis: It should be.

Mr Waters: -- because I obtained one of those at one time that I never signed.

Ms Karakatsanis: Do you want that off the record?

Mr Waters: No, I am just stating that these things -- I was ignorant of the fact that I had to sign at the time, and there is the fact that these things do go on.

Ms Karakatsanis: The applicant is supposed to sign. That is perhaps something we can look into.

The Chair: One final questioner.

Ms Haslam: I understand that when you go for a new licence there is an opportunity for a public hearing. Is that opportunity there when there is a transfer of licence?

Ms Karakatsanis: No, there is not. The public interest is not a criterion that applies to transfer of a licence. However, it does apply to the continuation of a licence, so that if once it is transferred it becomes a problem establishment, then the board can review that licence to suspend it or revoke it, based on the public interest.

Ms Haslam: In a transfer of licence, is it going from an individual to an individual usually, then?

Ms Karakatsanis: It depends. It can go from an individual to a corporation or to a partnership.

Ms Haslam: But in that instance, then, there is no advertisement? For instance, if the ownership in a particular establishment has changed, people would not know about it because there was no public advertising that it was being changed to another type of person or another type of corporation.

Ms Karakatsanis: That is right. I guess the philo-sophy behind the approval of licences is that it is the board's responsibility to look to the past conduct of the applicant. The board has to be satisfied that they are not disqualified on those grounds that are particular to the applicant or the person. The public interest looks to the licence precisely for the reason that licences do change hands. That is why, if the public is objecting to a licence and the owner says to the board member, "Look at my prices. This is a fantastic menu and I close at 11 o'clock anyway," the board will in those circumstances attach a term and condition to the licence for 11 pm closing, recognizing that they can turn around and sell it tomorrow and the new owner might change it. So if there is a public concern raised at the hearing --

Ms Haslam: At the original hearing.

Ms Karakatsanis: -- at the original hearing as to the nature of the licence, then restrictions are put on by way of conditions that stay with the licence even if there is a transfer. In your routine case where there have been no problems with an establishment and there is a transfer, then we would have to wait until a problem is brought to our attention and deal with the licensee. It is very difficult when there is a transfer to say, "I speculate that there might be these kinds of problems." It is much easier to deal with an actual problem that has arisen.

Ms Haslam: I am thinking of a particular instance where a business is sold because they are changing the outlook. They are now going into more a pub area or it is now going into a disco type of facility and that change would make a change in the community, would make a change in how it is perceived, yet without a particular knowledge that this is happening the public has no opportunity to come forward and say something about it.

Ms Karakatsanis: That is right, but that is why, if there have been any concerns raised initially, then the problems would be addressed by conditions to the licence. If no concerns were raised to the licence at all by the community at the beginning, then it will have to wait until a problem arises. I guess that if the residents are concerned about a restaurant, they tell us about it. Then if it looks like they do not care about this specific kind of operation, we will usually accommodate it with terms and conditions so that a change in business will not affect that part of it.

Ms Haslam: It is not the best, but --

Ms Karakatsanis: I do not want to be seen as being contemptuous of Mr McGuinty's question, so perhaps I could go so far as to say that the liquor licence board, that I have no objection to labels. I do not know if that assists you in any way.

Mr McGuinty: Very much.

The Chair: Ms Karakatsanis, Mr Tocher, we appreciate your appearance before the committee today. I alert you to the fact that we are going to be discussing your performance, if you will, with a number of client groups, so the possibility exists, a slim one, that we may, before deliberating on our final report, ask you to make a brief appearance once again. I would suggest that is a slim possibility, but I wanted to make you aware of it. Once again our thanks for appearing here today.

Ms Karakatsanis: Thank you. We would be happy to accommodate you in any way if there are any further issues that arise, any further information you require.

The Chair: We very much appreciate it. We will break off proceedings and see the members at 10 o'clock tomorrow morning.

The committee adjourned at 1627.